SAN FRANCISCO, Dec 9 - Leading U.S. engineering companies do not expect much federal stimulus money to flow in their line of sight any time soon, but believe opportunities in Canada's oil sands are ripe with the recovery in crude prices. Executives said on Wednesday the local and shovel-ready nature of many stimulus-funded projects meant their companies might not see much of the money, and anyway the U.S. government expects only a fraction more of it to start moving next year. "So we're not really counting on too much," URS Corp
(URS.N) Chief Executive Martin Koffel said at a conference.
"Having said that, we think there will be some design-build projects next year to which we would be attracted." John Prosser, chief financial officer at Jacobs Engineering Group Inc (JEC.N), later told the same Bank of America Merrill Lynch 2009 Global Industrial Conference that any positive
effect from U.S. federal stimulus had been more than offset by
weakness in state and city finances around the country. Nonetheless, Koffel pointed to approvals of an $11 billion California high-speed rail bond and of sales-tax funding for road improvements in Los Angeles as signs that local money could always be spent on politically desirable projects. Further north, prospects in Canada's oil sands had taken a serious hit while crude prices languished for the six months to May below $60 per barrel, having topped $140 last year. But the solid recovery in crude prices CLc1 in the second
half of this year has put much of that work in Canada, which Prosser sees as a $200 billion opportunity, back on the table. "At the prices we're seeing today, many of these projects will go forward," Prosser told the Bank of America Merrill Lynch conference in New York, which was webcast. KBR Inc's (KBR.N) president of hydrocarbons, John Rose,said at another conference on Wednesday that his company's prospects in Canada had also improved. "The Alberta business, with the tar sands, is starting to come back again," Rose told the Capital One Southcoast 2009 Energy Conference in New Orleans, which was also webcast. Executives at URS, with 60 percent of its business funded
by government money, expect to maintain operating margins in a 5 percent to 6 percent range with its now-battle-worn business model driven by a series of diverse revenue streams. "We never dreamt of the economic conditions that occurred," Koffel said of the past year. "We never expected sort of a
45-degree tilt in the platform, but it's weathered it well." The economy-driven demand slump hit URS on the power side,while Prosser said much of the money being spent on upstream projects like the oil sands was moved out of the downstream. But he said any given $9 billion, 300,000 barrel-per-day refinery required 1 to 3 percent of its cost to be spent annually on upkeep, leaving out environmental upgrades. And MARPOL regulations for sulfur removal from crude in ocean transport, as well as improvements to process oil sands
output, meant refiners have to make investments in the next few years, even if no new facilities are built, Prosser added.
(URS.N) Chief Executive Martin Koffel said at a conference.
"Having said that, we think there will be some design-build projects next year to which we would be attracted." John Prosser, chief financial officer at Jacobs Engineering Group Inc (JEC.N), later told the same Bank of America Merrill Lynch 2009 Global Industrial Conference that any positive
effect from U.S. federal stimulus had been more than offset by
weakness in state and city finances around the country. Nonetheless, Koffel pointed to approvals of an $11 billion California high-speed rail bond and of sales-tax funding for road improvements in Los Angeles as signs that local money could always be spent on politically desirable projects. Further north, prospects in Canada's oil sands had taken a serious hit while crude prices languished for the six months to May below $60 per barrel, having topped $140 last year. But the solid recovery in crude prices CLc1 in the second
half of this year has put much of that work in Canada, which Prosser sees as a $200 billion opportunity, back on the table. "At the prices we're seeing today, many of these projects will go forward," Prosser told the Bank of America Merrill Lynch conference in New York, which was webcast. KBR Inc's (KBR.N) president of hydrocarbons, John Rose,said at another conference on Wednesday that his company's prospects in Canada had also improved. "The Alberta business, with the tar sands, is starting to come back again," Rose told the Capital One Southcoast 2009 Energy Conference in New Orleans, which was also webcast. Executives at URS, with 60 percent of its business funded
by government money, expect to maintain operating margins in a 5 percent to 6 percent range with its now-battle-worn business model driven by a series of diverse revenue streams. "We never dreamt of the economic conditions that occurred," Koffel said of the past year. "We never expected sort of a
45-degree tilt in the platform, but it's weathered it well." The economy-driven demand slump hit URS on the power side,while Prosser said much of the money being spent on upstream projects like the oil sands was moved out of the downstream. But he said any given $9 billion, 300,000 barrel-per-day refinery required 1 to 3 percent of its cost to be spent annually on upkeep, leaving out environmental upgrades. And MARPOL regulations for sulfur removal from crude in ocean transport, as well as improvements to process oil sands
output, meant refiners have to make investments in the next few years, even if no new facilities are built, Prosser added.
